With revenues, especially from taxes, buoyant, the Centre has resolved to continue to spend its way out of the sluggishness in economic activity in the private sector. On Wednesday, it sought Parliament’s approval for gross additional expenditure of Rs 59,978 crore for FY17; given the savings by ministries and enhanced receipts, the net outgo would be only Rs 35,172 crore.

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In August, the Centre had got the House’s nod for spending an extra 20,948 crore (net).

With these two supplementary demands being met, Plan expenditure would be higher than the Budget target by Rs 44,000 crore to Rs 5.94 lakh crore; till October, this was already Rs 70,000 crore higher than the year-ago period.

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Government sources said that tax receipts (up 24 per cent till October-end) would be close to Rs 50,000 crore higher than the Budget target of Rs 10.54 lakh crore (post-transfer to states), without factoring in extra receipts from demonetisation.

Despite the higher salaries to government staff on account of the Seventh Pay Commission, non-Plan expenditure has been more or less contained at the previous year’s level in relation to the annual estimate.

The country’s gross domestic product grew by 7.3 per cent in the September quarter (compared to 7.1 per cent in Q1FY17), thanks to support from consumption aided in good measure by government spending as investments continued to be in the doldrums. Government final consumption expenditure (GFCE) grew 18.8 per cent in Q1FY17 and 15.2 per cent in Q2FY17. GFCE share in GDP increased a massive 2.2 percentage points to 13 per cent between Q1FY16 to Q2FY17. Till October-end, 60 per cent of the expenditure envisaged in the Budget was spent.

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The additional spending for which Parliament’s approval has now been sought would be panned out across rural development, education, healthcare and infrastructure sectors (see chart). It won’t lead to any extra borrowings. FE